The Procurement Glossary » Group Purchasing Organization (GPO)

Group Purchasing Organization (GPO)

Sourcing & RFx

Also known as: GPO

Definition

An entity that aggregates the purchasing volume of many members to negotiate discounts with suppliers on their behalf.

Explanation

A GPO does the sourcing and contracting; members buy at the negotiated rates. It suits common, high-volume categories where scale drives price. Members save effort and money but cede some control over supplier choice and terms.

Example

By joining a GPO, the clinic accesses pre-negotiated rates on medical consumables without running its own tenders.

Related terms

• Consortium Purchasing — Buying jointly with other organisations to aggregate volume and secure better pricing and terms than any member could alone.
• Framework Agreement — An umbrella agreement setting pre-negotiated prices and terms with one or more suppliers, from which individual orders are placed as needed.
• Leverage — The relative bargaining power a buyer or supplier holds in a negotiation, driven by factors like volume, alternatives and switching cost.

Frequently Asked Questions

What is Group Purchasing Organization (GPO)?

An entity that aggregates the purchasing volume of many members to negotiate discounts with suppliers on their behalf. A GPO does the sourcing and contracting; members buy at the negotiated rates. It suits common, high-volume categories where scale drives price. Members save effort and money but cede some control over supplier choice and terms.

Can you give an example of Group Purchasing Organization (GPO)?

By joining a GPO, the clinic accesses pre-negotiated rates on medical consumables without running its own tenders.

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